US-Cuba relations: Their rapprochement carries a message that should have resonance far beyond the gates of a newly-reopened embassy

Cuba’s flag was raised over its embassy in Washington for the first time in 54 years on Monday EPA

It was symbolic; but symbols matter. On Monday, a flag was raised outside a grand 100-year-old building in the Adams Morgan district in Washington. The Cuban Embassy, which had been shut for 54 years, formally reopened. The diplomatic grandees duly trooped in and out of the reception marking the occasion, and the Cuban community outside started to dance. They were still dancing far into the hot summer evening as the TV cameras wrapped-up their reports and the police in the white Fords of the US Secret Service ended their shifts and went home.

In practical terms, little has changed. The US trade embargo still applies and there were quiet reminders of that in the placards outside the embassy. Cuba’s internal economic restrictions are being eased only slowly, and you can have a philosophical debate as to what extent Cuba’s economic woes are the result of the embargo and to what extent they are self-imposed. In any case, Cuba’s consulate, housed in a rather less grand building on the opposite side of the street, had been functioning normally while the embassy was shut.

Still, it is a new chapter in a long-running story – or rather three stories, for US-Cuba relations have three aspects: political, economic, and social.

On the first there is not a lot to be added beyond the obvious. The relationship is so unequal that the rapprochement matters vastly more to Cuba than it does to the US. But opening embassies ends an anomaly: why maintain a continuing quarrel between two counties, separated by less than 100 miles of water, because they happened to have a punch-up half a century ago? There are bigger problems in the world. If, as a shrewd observer of those festivities on Monday told me, this felt like a stepping stone on the path to the closure of the US prison on Guantanamo Bay, that would be rather more important.

The economic story needs a little more fleshing out. At one level, and from the US perspective, it really does not matter at all what happens to the Cuban economy – the US economy adds the equivalent of another Cuba to its coffers about every seven weeks.

On the other hand, it is not at all in the self-interest of the US to have economic chaos so close to its shores. One of the successes of the Cuban government, aside from its system of healthcare, is that it has kept the drug trade away. The Cuban economy will develop as economic liberalisation marches on but you certainly don’t want liberalisation to create space for drug lords to escape from maximum security prisons by having their people build mile-long tunnels to get them out. The Mexican economic model has many admirable features, but its illegal drug industry is not one.

It is hard to make the transition from a command economy to a market one without social damage on the way. Eastern Europe has, by and large, managed to do so, helped not just by EU membership but by the example of successful market economies next door. Russia has pretty much failed. So the challenge for Cuba is how to be, say, a Poland rather than a Ukraine.

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I doubt that the Cuban leadership thinks in those terms, but if you look at what it has done rather than what it says, you can see it inching towards a standard market economy. The government has just allowed one of its state-owned companies, Palco Group, to launch a joint venture in Havana with WPP, the giant London-based advertising and marketing group. Other European-based multinationals such as Unilever and Nestlé have joint ventures in Cuba, while Coca-Cola is available thanks to a legal loophole. When the embargo is lifted, the big US hotel chains will be eager to get in, for the prime way in which Cuba will benefit from a more open border will be tourism (at present US citizens can visit but if they fly direct they have to do so with a cultural or educational purpose).

Actually, it is fascinating how much economic progress Cuba has made without full access to the US tourist market. Tourists are the country’s prime source of hard currency. Gradual, small liberalisation has created a new entrepreneurial middle class, with people quietly renting out rooms to visitors and running private restaurants in their homes. It is thanks largely to this private sector activity that income per head has doubled in the past decade, and growth is running at 4 per cent. Its GDP per head is roughly the same as that of other large countries in the West Indies, such as Jamaica or the Dominican Republic.

But Cuba ought to be doing better still, given its heritage, its high educational levels and its proximity to the US. In the 1950s Cuba was the wealthiest of the countries in the West Indies, with a similar GDP per head as Italy. That is the economic prize that should be within the country’s grasp, but how you achieve that while maintaining the separate social structure of the island is a challenge indeed.

You can catch only the barest glimpse in Washington of the social story unfolding in Cuba. But there was one thing that was quite evident at the celebrations outside the embassy, and rather humbling too. That was the emotion: people were crying as well as dancing. They were Americans but also Cubans, and one effect of the rapprochement is that people are allowed to be both and not have to choose. The relationship can never be that of equals, but then the relationship between the US and all other countries is not that of equals. But it is reasonable for other countries, such as Cuba, to be respected – for people not to be defined by the quarrels, or even the posturing, of their political leaders. It is a message that should, I suggest, have resonance far beyond the gates of the newly-reopened Cuban Embassy. If political leaders can make people happier by getting along with each other rather than picking quarrels, what’s wrong with that?